Freight railroads post lower traffic volumes for 2016; AAR previews 2017 priorities

North American rail volume in 2016 declined 4.5 percent to 34,820,886 carloads and intermodal units compared with 2015, according to the Association of American Railroads (AAR).

U.S. rail carloads fell 8.2 percent to 13,096,860 units, while intermodal volume dropped 1.6 percent to 13,490,491 containers and trailers in 2016. Total rail traffic volume in the United States was 26,587,351 carloads and intermodal units, down 5 percent or 1,389,323 carloads and intermodal units from the same point last year, AAR officials said in a press release.

Canadian railroads reported cumulative rail traffic volume of 6,845,205 carloads, containers and trailers, down 3.1 percent in 2016 compared with traffic volume in 2015. Mexican railroads last year logged 1,388,330 carloads and intermodal containers and trailers, down 1.9 percent from the same point in 2015.

"Last year was challenging for freight railroads," said AAR Senior Vice President of Policy and Economics John Gray. "Rail carloads were down for the second consecutive year, due mainly to a weak manufacturing economy and turmoil in energy markets, while intermodal failed to set its fourth straight annual record. That said, there are signs that the economy may be gradually returning to a period of growth."

Last month, U.S. railroads reported 973,642 carloads, up 2.8 percent from December 2015. U.S. railroads also originated 1,011,870 containers and trailers last month, up 11.2 percent. Combined U.S. carload and intermodal originations were 1,985,512, up 6.9 percent compared with carloads and intermodal units in December 2015.

Thirteen of the 20 carload commodity categories tracked monthly by the AAR logged carload gains last month compared with December 2015. They included coal, up 4.2 percent or 13,360 carloads; grain, up 10.5 percent or 8,663 carloads; and chemicals, up 3.9 percent or 4,599 carloads.

Commodity categories that logged year-over-year declines last month included petroleum and petroleum products, down 17.4 percent or 8,568 carloads; crushed stone, gravel and sand, down 4.1 percent or 2,889 carloads; and miscellaneous carloads, down 5.9 percent or 1,265 carloads.

In response to market shifts in the U.S. economy that have affected the freight-rail industry, the AAR recently outlined policy recommendations "designed to help preserve and enhance the industry's positive impact on the nation's economy, while allowing for continued safe, efficient and reliable freight transportation service," AAR officials said.

The industry will advocate for a "simpler and fairer tax code to enhance U.S economic development, promote growth and reduce debt," said AAR President and Chief Executive Officer Ed Hamberger. "Freight railroads will also push for a sustainable funding source that provides for aggressive investment in public infrastructure."

Hamberger also addressed the AAR's ongoing concern with proposed regulations before the Surface Transportation Board (STB).

"Current STB proposals would inhibit railroads' ability to continually invest the amount of capital needed to make the 140,000-mile network work for Americans," Hamberger said. "The board should be cognizant of the economic impact our industry and promote regulations that enhance job growth and development."